Exchange Rate Hampers Travel

EAST GERMANY

`WE need a unified mark before we can have a unified Germany,'' suggested an East German housewife at the end of her weekend shopping trip here. She was describing the last effective travel restriction on East Germans: littlespendable money. Freedom to travel has increased East Germans' need for hard currency. Their country's tiny bills and lightweight aluminum coins are all but worthless in the West.

The freedom to travel abroad could frustrate East Germans if they find that they cannot afford it. East and West Germany have made resolving the currency situation a top priority.

``The magic solution would be to make the East mark convertible,'' says Peter Pietsch, an economist with Commerzbank in Frankfurt. East German Communist Party leader Egon Krenz has said that the free convertibility of the East mark was one of the most important elements in an upcoming economic reform package.

The problem is that ``normalization of the East mark will take between five to 10 years,'' says Mr. Pietsch. After postponing their travel plans in some cases for 40 years, few East Germans are content to wait any longer.

The two governments are working out plans that would get hard currency to East Germans now. Early meetings between a representative of West German Chancellor Helmut Kohl and East German leaders included discussions about a ``foreign currency fund.'' This West German proposal would triple the yearly ``welcome money'' of 100 marks ($54) Bonn gives to visiting East Germans. It would also allow currency exchanges at a subsidized rate of four or five East marks to one West German mark. Recent transactions have occurred at unofficial rates of 20-1.

Both governments would contribute to the fund, although certainly West Germany the most. Announcement of the details is expected sometime before Mr. Kohl's visit with Mr. Krenz in East Berlin on Dec. 19.

Meanwhile, attempts by East Germans to get hard currency have destabilized the already feeble East mark and caused authorities in East Berlin to reinstate more thorough customs controls.

To finance trips abroad and purchases of Western goods, East Germans generally obtain hard currency in some of five ways:

Gifts of cash from relatives in the West. After the West German ``welcome money'' gift, this is the most common source of money.

Trade East marks for West German marks in the West. Although it is illegal to take marks out of East Germany, many people have done so. Long lines of East Germans can be seen outside money exchange offices every weekend in West Berlin. Official East German estimates claim that 500 million East marks have gone abroad since borders opened on Nov. 9. Western estimates put the outflow as high as 3 billion marks.

Sell valuables abroad. This too is illegal under East German law. Some visitors, though, find it hard to resist offers posted in many store windows in West Germany of hard cash for antiques, jewelry, and china. East Germany is hoping to stop the smuggling with increased searches at border checkpoints.

Buy cheap subsidized goods in the East and sell them for West German marks in the West. Shortly after the easing of travel restrictions, items such as underwear, baby clothes, and electronic goods disappeared from store shelves in East Berlin. To combat this, authorities last week began requiring customers to show their East German identity papers in stores, and stopped cars at the border attempting to smuggle cheap goods out of the country.

Moonlight at jobs over the border for cash wages. This is illegal in both East and West Germany. Far from being considered industrious, moonlighting workers in West Germany are thought to be taking jobs away from unemployed people. Moreover, they don't pay taxes. East Germany instituted rules this week that penalize its citizens caught working in the West.

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